American Savings By Generation: How Balances And Goals Vary By Age

In the face of high interest rates, the rising cost of living and other financial challenges, saving money has never been more critical. For many Americans, however, the ability to save is becoming a luxury.

Forbes Advisor’s latest survey reveals trends and patterns regarding how four key generations (Generation Z, Millennials, Generation X and Baby Boomers) approach saving, shedding light on how the current economy impacts saving habits.

How Much Do Americans Have in Savings?

With skyrocketing costs of living, it’s more important than ever to have a solid financial safety net. Here’s a closer look at how much Americans have in savings.

According to our survey, roughly 28% of Americans across all four generations currently have less than $1,000 in personal savings, including emergency funds, non-workplace retirement accounts and investments. With the average national rent price sitting at $1,372, having less than a grand tucked away means many Americans are teetering on the edge of financial instability, with little cushion to absorb unexpected expenses.

Undoubtedly, age plays a big role in the amount of savings one has—older generations typically have more money saved, as they've had more time to accumulate wealth. Our survey found that the majority of Gen Zers (54%) and Millennials (52%) have less than $5,000 saved, compared to 42% of Gen X respondents and 29% of Baby Boomers.

Unsurprisingly, the oldest generation—Baby Boomers—have amassed the most impressive savings balances. Our survey revealed that around 17% of Baby Boomers have more than $500,000 saved, while that figure dwindles to just 4% among both Gen Xers and Millennials and a mere 2% among Gen Zers.

What Types of Savings Accounts Are the Majority of Americans Using?

Savings accounts are designed to hold money while earning some interest, though the exact amount of interest will vary depending on account type. Options like certificates of deposit and high-yield savings accounts often provide competitive interest rates, with some paying 5% APY or more.

Despite this potential for high returns, our survey revealed that while most Americans (68%) reported having a standard savings account, few are taking advantage of more lucrative options, such as high-yield savings accounts (24%) or CDs (14%).

After digging deeper into the data, we found that savings account preferences vary by generation as well—cash management accounts were Gen Zers' second-most-popular way of saving (23%). Retirement accounts, on the other hand, emerged as the second-most-favored savings option for Millennials, Gen Xers and Baby Boomers, with their popularity steadily increasing as respondents aged.

As people mature, their financial priorities tend to shift, which could mean putting more effort into long-term financial planning and preparing for retirement. While cash management accounts offer convenience and flexibility, they may pale in comparison to 401(k)s or Roth IRAs when it comes to saving for retirement. This difference in savings preferences shows how Americans often align their financial strategies with evolving life goals or priorities.

How Much Do Americans Plan To Save Toward 2024 Goals?

When asked how much they plan to save toward their 2024 goals, 31% of our survey respondents said they aim to save between $2,501 and $5,000.

When we broke down the answers by generation, Gen Zers were the most ambitious savers, with 46% reporting a desire to save $5,001 or more, compared to 36% of Millennials, 38% of Gen Xers and 30% of Baby Boomers.

Baby Boomers appear to be taking a more conservative approach and are planning to save the least amount of money toward their primary savings goal compared to the rest of the generations, with 30% expecting to save $2,500 or less in 2024.

What Americans Are Saving for in 2024

When we asked our survey respondents what they were saving for in 2024, 24% said they were focused on building up emergency funds. But as we dug into the details of our data, we discovered that what drives people to stash away their cash varies by generation.

The highest percentage of Gen Zers (22%) reported that they're primarily saving up for a new car this year. Millennials (25%) and Gen X (28%) reported saving up for an emergency fund as their biggest priority. Understandably, 30% of Baby Boomers said saving up for retirement was their biggest goal for 2024.

Do Americans Anticipate Saving More or Less in 2024 Compared to 2023?

As inflation and the cost of living continue to weigh on many Americans' minds, we were curious to see whether people are gearing up to supercharge their savings this year or dialing it back.

When asked this question, nearly half of our survey respondents (49%) said they anticipate saving the same amount or less in 2024 than they did in the previous year, whereas 46% expect to save somewhat more or much more.

Age appeared to be a significant factor influencing participants' expectations regarding their ability to save in 2024. Older generations were more likely to believe they would save less. Specifically, Baby Boomers made up the largest proportion of respondents expressing this belief at 26%, followed by Millennials at 22%, Gen X at 19% and Gen Z at 13%.

Gen Zers were the most confident (69%) in being able to save more this year compared to Millennials (50%), Gen X (39%) and Baby Boomers (27%).

Why Americans Expect To Save Less in 2024 Than in 2023

As prices continue to increase in almost every aspect of life—from groceries to housing—many Americans are struggling to make ends meet, let alone strengthen their savings. Of the 49% of respondents who anticipate saving less or the same amount in 2024 compared to 2023, a significant majority (66%) pointed to the rising cost of living as the predominant obstacle to saving more.

Among the 66% of respondents who provided this answer, 70% of them were Generation X, 69% Millennials, 67% Baby Boomers and 54% Gen Zers.

Paying off debt was the second most common barrier to saving money across all generations, cited by 37% of Millennials, 34% of Generation X, 33% of Gen Zers and 24% of Baby Boomers. According to the Federal Reserve Bank of New York’s Center for Microeconomic Data’s Quarterly Report on Household Debt and Credit, consumer credit card balances increased by a whopping $50 billion to $1.13 trillion in Q4 of 2023. Auto loan balances also rose by $12 billion, continuing the upward trajectory seen since 2020, and are now sitting at $1.61 trillion.

Tactics Americans Use To Increase Monthly Savings Contributions

One of the easiest ways to increase monthly savings is by cutting back on unnecessary expenses, such as ordering food delivery or subscribing to streaming services. The majority of Americans across all generations are aware of this strategy, with 57% saying they’re cutting back on nonessential expenses to save more money.

Aside from cutting back on unnecessary spending, the second most cited strategy is taking on a second job or side hustle. This trend is especially prevalent among Millennials (44%), followed by Gen Z (38%), Gen X (34%) and Baby Boomers (23%).

Gen Zers were the most likely generation to relocate to a more affordable city to boost monthly savings, with 14% having done so, compared to 8% of Millennials and Gen X and only 3% of Baby Boomers. It may be easier for younger generations who haven't started a family or purchased a home yet to relocate.

How Often Do Americans Dip Into Their Savings?

Ideally, the money in your savings account should be reserved for unexpected expenses or a specific item you’ve been saving for. While it’s not the end of the world if you dip into your savings for daily expenses like grocery bills or shopping sprees, this can stunt the growth of your savings. Leaving it untouched allows compound interest to work its magic.

Our survey revealed that Gen Zers are more prone to tapping into their savings for everyday expenses compared to any other age group, with 38% saying that they dip into their savings either on a daily (15%) or weekly (23%) basis.

We found the habit of tapping into savings regularly diminishes as Americans age. Just 22% of Millennials, 15% of Gen X and 3% of Baby Boomers report dipping into their savings to cover typical expenses on a daily or weekly basis.

How Americans Plan To Tackle Unexpected Expenses

Unexpected expenses can derail your financial plans, especially if you haven’t built a cushy emergency fund to cover those costs.

When our survey respondents were asked how they would handle unforeseen expenses that exceed their budgets, most respondents (59%) said they would dip into savings. Taking on debt via credit cards or loans was the next popular choice (30%), followed by alternative options, such as selling belongings or cutting back on expenses (29%).

After segmenting the survey results by generation, we found that Baby Boomers were the most likely to dip into savings for unexpected expenses, with 67% reporting this approach. Millennials were the most likely to take on debt (33%), while Gen Zers display the highest tendency among all generations to explore alternative options (38%).

Ways To Earn More Interest on Your Savings

Parking your cash in a regular checking account or under your mattress means your money is slowly losing value to inflation. Here are some ways to earn interest on your savings and protect your purchasing power.

• Park your cash in a high-yield savings account. These accounts offer much higher interest rates than traditional savings accounts, and you can typically find them at online banks. The best high-yield savings accounts currently earn an APY of around 5.25%, over ten times the national average rate, according to the FDIC. Check out our list of the best high-yield savings accounts to find the best option for you.
• Consider certificates of deposit (CDs). CDs also offer much higher interest rates than traditional savings accounts. But in exchange for better APYs, you must leave your money untouched for a set period of time, as early withdrawals typically result in hefty penalties. As of April 2024, the best CD rates surpass 5.00% APY.
• Get a rewards checking account. If you use a debit card or checking account on a daily basis and want to earn rewards for spending, consider opening a rewards checking account. Perks vary by bank, but you can earn interest, cash back, ATM fee reimbursements or bank bonuses once you sign up.
• Check with your local credit union. Unlike traditional banks, local credit unions are not-for-profit financial institutions that exist to promote the well-being of their account holders, who are also part owners of the institutions. In most cases, this translates to lower fees, higher interest rates and more account perks.

How To Maximize Financial Growth and Achieve Savings Goals

If you have less than a grand in your savings account, there are a few ways to beef up your savings and reach your money goals.

• Build an emergency fund. Having an emergency fund can provide a cushion to cover unexpected expenses like medical emergencies, car repairs or job loss. Most experts recommend saving at least three to six months' worth of living expenses in your emergency fund. So, if you spend $2,000 a month, you’ll need $6,000 to $12,000 tucked away. Make sure to put your emergency fund in a high-yield savings account or a money market account so inflation doesn’t erode your savings.
• Tackle high-interest debt. High-interest debt, such as credit card debt or payday loans, can stunt your financial growth. The longer you wait to pay back your debt, the more interest you’ll rack up. If you haven’t already, start by making a list of all your debts, including their interest rates and minimum monthly payments. Then, use the debt avalanche or debt snowball method to slowly chip away at your debt.
• Automate your savings. Automating your savings helps you prioritize putting money away and removes the temptation to overspend. Most mobile banking apps let you schedule automatic transfers from your checking account to your savings. Some money-saving apps even offer round-up transfers on debit card purchases. If you automatically save $420 every month, you’ll have over $5,000 tucked away in 12 months.
• Boost your income. The more money you make, the more you can save without changing your spending habits. So, if you have extra time on your hands, consider taking on a part-time job. Just $900 more in earnings a month could turn into a little over $10,000 in savings a year.

Methodology

This online survey of 1,000 Americans with savings, split evenly by generation, was commissioned by Forbes Advisor and conducted by market research company OnePoll, in accordance with the Market Research Society’s code of conduct. Data was collected from Mar 18 to Mar 25, 2024. The margin of error is +/- 3.1 points with 95% confidence. This survey was overseen by the OnePoll research team, which is a member of the MRS and has a corporate membership with the American Association for Public Opinion Research (AAPOR).